The FTC has sued to block Whole Foods (NASDAQ: WFMI) acquisition of Wild Oats (NASDAQ: OATS) on anti-trust grounds, and has compiled some pretty compelling evidence that Whole Foods CEO John Mackey wanted the deal for anti-competitive reasons.
In emails to members of his company's board before the deal was announced, Mackey talked about the need to "eliminate forever" the possibility that another chain could challenge Whole Foods' dominance in the industry, and also talked up the acquisition as a way to "avoid nasty price wars."
Mr. Mackey responded to the allegations the way any good executive would -- he blogged about it. He quoted several of the emails mentioned by the FTC:
- Reasons to do this deal:
- Elimination of an acquisition opportunity for a conventional supermarket - our targeted company is the only existing company that has the brand and number of stores to be a meaningful springboard for another player to get into this space. Eliminating them means eliminating this threat forever, or almost forever.
- Elimination of a competitor - they compete with us for sites, customers and Team Members.
Note: these two points add tremendous value that does not show up in any of the pro formas.
If you're interested in the case, be sure to read Mackey's blog post. He makes a strong case, but my favorite part is when he suggests that the FTC is taking the remarks out of context and argues that "They aren't going to place these private e-mails, or documents, or web postings in their proper context of an ongoing conversation, debate, brainstorming, or in many cases "macho posturing" by executives within the normal business flow of any competitive corporation.
Ah yes. The good ol' "macho posturing" defense.
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